Ford chief executive officer Alan Mulally’s crisis is Mazda CEO Hisakazu Imaki’s opportunity.
The two men are partners in moving the second-largest US automaker away from the trucks and large sport-utility vehicles consumers are shunning in the face of $US4-a-gallon gasoline. Ford, which saved Mazda from near-bankruptcy 12 years ago, owns a third of the Hiroshima-based company, Japan’s fifth-largest automaker.
Ford’s Fusion and Mercury Milan midsize sedans, based on the Mazda6 and rated at up to 29 highway miles per gallon, were the Dearborn, Michigan-based company’s only models to gain US sales last month. Half of the automaker’s cars will be based on the designs of its Japanese affiliate by 2010, up from 43% this year, according to CSM Worldwide, a Northville, Michigan-based automotive-consulting firm.
“Mazda is attractive now,” said Masayuki Kubota, a fund manager at Daiwa SB Investments in Tokyo, who oversees the equivalent of $US1.7 billion, including the automaker’s shares.
“There’s a flood of demand for small cars in the US right now and Mazda gains from Ford’s need for its development expertise.”
The Japanese company is saving about 12 billion yen ($US111.4 million) a year through joint development with Ford, according to Credit Suisse Group senior analyst Koji Endo.
That amount will rise as cooperation increases, he said. Mazda plans to spend 115 billion yen on research and development in the year ending next March.
The shares may rise to 700 yen within 12 months, according to Endo, approaching their 16-month high of 718 yen in June 2007. Ten analysts in a Bloomberg survey recommend buying, seven say to hold, and two advise selling.
Mazda climbed 1.6% to 620 yen in Tokyo Stock Exchange trading yesterday, making Ford’s stake worth $US2.73 billion. The 11% gain this year makes it the best-performing Japanese automaker. A rise to Endo’s target price would add about $US355 million to the value of Ford’s investment.
Mazda plans to increase its models’ fuel economy by an average of 30% in the next seven years by making vehicles lighter and developing thriftier engines. The quest for efficiency is spurring cooperation between Mulally and Imaki.
Ford will make a small Fiesta model based on a Mazda design in India as early as 2009, according to CSM, and the two companies will build autos at a jointly owned Thai plant next year.
The Japanese carmaker will also supply Ford with redesigns for the Fusion sedan and Edge crossover wagon to be built in the US
